Ratings Agencies Frown on Safeway Decision

NEW YORK — Fitch Ratings here said Wednesday it has downgraded its long-term issue default rating on Safeway to BBB-minus from BBB and its short-term IDR to F3 from F2, with a stable rating outlook.
The action is based on Fitch's expectations that Safeway will use a portion of the proceeds from a new notes issue and a $700 million term loan to repurchase stock, "[which] reflects a deviation from Safeway's previous financial strategy under which it repaid debt with a ...

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